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America’s monthly inflation reports are now awaited more with optimism than dread. On Thursday figures are expected to show that overall prices were flat in December compared with November. That would be a second straight month of diminishing inflationary pressure. Optimists think that could allow the Federal Reserve to stop raising interest rates sooner rather than later, which would boost America’s chances of avoiding a serious recession.

Alas, pessimists may have a more downbeat interpretation. The main reason for milder inflation has been a fall in prices for energy and some consumer goods, as supply chains recover from the disruption caused by the pandemic. But the Fed has made it clear that it is now most concerned about how rising wages are feeding into higher prices for services such as entertainment and travel. Until there is ample evidence that the labour market is weakening, the Fed is likely to stay on the warpath against inflation.